John P. Ford, Jr., and Kristi F. Curtis, both of Bryan, Bahnmuller, Goldman
& McElveen, LLP, of Sumter, for Respondent.

JUSTICE PLEICONES: Gary George (George) and Geneva
Covington (Covington) were involved in an automobile accident in March 1999.
At trial, George sought to introduce evidence that the hospital that treated
Covington accepted as full payment an amount less than that billed to Covington.
The trial judge excluded the testimony pursuant to Rule 403, SCRE, finding the
information would confuse the jury. George appealed and the case was transferred
from the Court of Appeals pursuant to Rule 204(b), SCACR. We affirm the trial
court’s ruling.

FACTS

George rear-ended Covington on Highway 378 while Covington was stopped for
a school bus. The damage to both vehicles was minor.
[1] At trial, George admitted that he was liable for the accident, therefore
the only issue was damages. George argued that Covington was entitled to only
a modest damage award because there was a low-impact collision resulting in
only soft tissue injuries.

At trial, George proffered testimony of Ranell Benehaley, manager of medical
records for Tuomey Health Care System. Benehaley testified, incamera,
that Covington was billed $1,430.00 for services performed in May 1999, but
that Tuomey accepted $276.86 as full payment for the services. Benehaley also
testified that Covington was billed $1969.00 for services performed June 1999,
but Tuomey accepted $370.61 as payment on that account, while $58.05 was still
owed. The trial judge would not allow the jury to hear the testimony, ruling
that under Rule 403, SCRE, the testimony would confuse the jury. George did
not seek to enter into evidence the source of the payments to Tuomey. [2]

ISSUE

Did the trial court err in refusing
to allow George to present evidence that the amount Covington’s medical provider
accepted in payment was less than what it charged for its services?

ANALYSIS

George argues that this
Court’s opinion in Haselden v. Davis, 353 S.C. 481, 579 S.E.2d 293 (2003),
allows a defendant to introduce evidence that a medical provider accepted as
full payment an amount less than was billed for the services. We disagree and
hold the trial court properly excluded the evidence of the amount Covington’s
medical provider accepted as payment (hereinafter “actual payment amount”).

In Haselden, the
question was whether the Plaintiff could recover the amounts “written off” by
healthcare providers. Id. A majority of this Court held that those
amounts are recoverable by a plaintiff in a personal injury suit. Id.
In the case at hand, George argues that since Covington has the burden of proving
reasonable and necessary medical expenses as part of her damages, George should
be able to dispute the reasonableness of those charges through introduction
of the proffered testimony.

Whether the actual payment amount
may be utilized to establish the reasonableness of medical expenses was ancillary
to the main issue in Haselden because both the billed amount and the
actual payment amount were admitted into evidence. In Haselden, the
Plaintiff submitted evidence that she incurred medical expenses in the amount
of $77,905.21. 341 S.C. 486, 501, 534 S.E.2d 295, 303 (Ct. App. 2000). Medicaid
paid $24,109.04 to cover the services. 534 S.E.2d at 303. The difference between
the amounts billed and the amounts actually paid by Medicaid was $51,620.59.
Id. Defendants entered a letter as a court exhibit, which showed the
gross amount of the bills for Plaintiff’s services and the corresponding Medicaid
payments. The admissibility of the actual payment amount was not an appellate
issue in Haselden, but rather the issue was Plaintiff’s entitlement to
recover the difference between the billed amount and the actual payment
amount.

The case at hand differs substantially
from the situation in Haselden. Here, George did not object to Covington’s
introduction of the full amount of the bill but thereafter sought to introduce
the actual payment amount. Covington’s objection to this offer was sustained.

The question for this Court is
whether a party can introduce evidence of the actual payment amount to challenge
the reasonableness of the medical expenses sought by the plaintiff. We hold
that the collateral source rule is directly implicated in this case, and the
actual payment amount was properly excluded. Haselden, insofar as the
actual payment amount was before the court as evidence of reasonableness, is
limited to its facts.

The collateral source rule provides “that compensation received by an injured
party from a source wholly independent of the wrongdoer will not reduce the
damages owed by the wrongdoer.” Citizens and S. Natl. Bank of South Carolina
v. Gregory, 320 S.C. 90, 92, 463 S.E.2d 317, 317 (1995). A tortfeasor cannot
“take advantage of a contract between an injured party and a third person, no
matter whether the source of the funds received is ‘an insurance company, an
employer, a family member, or other source.’” Pustaver v. Gooden, 350
S.C. 409, 413, 566 S.E.2d 199, 201 (Ct. App. 2002)(citations omitted). In this
case, the actual payment amounts were made by a collateral source.

George argues that because he seeks only to introduce the fact of compromised
payments as opposed to their source, that no violence has been done to
the collateral source rule. While facially appealing, this argument ignores
the reality that unexplained, the compromised payments would in fact confuse
the jury. Conversely, any attempts on the part of the plaintiff to explain
the compromised payments would necessarily lead to the existence of a collateral
source. Inevitably, the inquiry would lead to the introduction of matters such
as contractual arrangements between health insurers and health care providers,
resulting in the very confusion which the trial judge sought to avoid in his
proper application of Rule 403, SCRE.

Other jurisdictions have held
that the actual payment amount is not admissible as evidence of reasonableness
of damages because that evidence would violate the collateral source rule.
For example, in Radvany v. Davis, 551 S.E.2d 347 (Va. 2001), the Supreme
Court of Virginia held that:

payments made to a medical provider
by an insurance carrier on behalf of an insured and amounts accepted by medical
providers are one and the same. Regardless of the label used, they are payments
made by a collateral source and are not admissible in evidence for that reason.

Furthermore, such amounts are
not evidence of whether the medical bills are “reasonable, i.e., not excessive
in amount, considering the prevailing cost of such services.” The amounts
accepted by [Plaintiff’s] health care providers represent amounts agreed upon
pursuant to contractual negotiations undertaken in conjunction with [Plaintiff’s]
health insurance policy. Such negotiated amounts, presumably inuring to the
benefit of the medical providers, the insurance carrier, and [Plaintiff], do
not reflect the “prevailing cost” of those services to other patients. Id.
at 348 (emphasis supplied)(internal citations omitted).

In Goble v. Frohman, a
Florida court held the collateral source rule prohibited introduction of contractual
discounts that were “written off” by the medical providers. 848 So.2d 406 (Fla.
2d DCA 2003). The court stated that “[t]o challenge the reasonableness or necessity
of the medical bills, [Defendant] could have introduced evidence on the value
of or need for medical treatment…there generally will be other evidence having
more probative value and involving less likelihood of prejudice than the victim’s
receipt of insurance-type benefits.” Id. at 410. See alsoFye
v. Kennedy, 991 S.W.2d 754, 764 (Tenn. Ct. App 1998)(holding that payments
that are forgiven, or paid by a third party is not evidence of the reasonableness
of a charge).

CONCLUSION

The trial judge correctly applied
Rule 403 and the collateral source rule in excluding evidence of the actual
payment amount. While a defendant is permitted to attack the necessity and
reasonableness of medical care and costs, he cannot do so using evidence of
payments made by a collateral source. The judgment of the trial court is AFFIRMED.